Employees claimed on average £1,768 for 'personal' costs on expense forms last year, reports RSA
David Woods, May 30, 2012
Exaggerated expense claims equated to an average cost to businesses of £1,768 per person last year, according to RSA, the commercial insurer, although some journalists have disputed the statistics.
At a time of increased workforce pressure and the rising cost of living, the findings show that more than half of UK workers have exaggerated an expense claim, with more than 40% doing so at least once a year.
It appears increasingly dishonest employee attitudes and a lack of effective processes for protecting businesses from fraudulent practices are only adding to the problem. When asked why they exaggerate expense claims, a third of employees claim that everyone does it, 25% say it's easy to get away with, and almost 20% believe the company owes it to them for their hard work. In addition, 40% don't believe an exaggerated expense claim amounts to theft, irrespective of its value.
The findings also highlight stark differences between employees across the UK regions and those working in different sizes of companies. Workers in the South East are the most cautious, having exaggerated expense claims by a total of £316 per person on average over the last twelve months, while those in the West Midlands pocketed as much as £2,170 over the same period.
There is also variation between the levels of fraudulent activity anticipated within each region year-on-year. While workers in the East Midlands and South East expect to double the value of personal items wrongfully claimed in the next twelve months, those in the North East expect this value to fall by more than half.
Looking at the breakdowns according to company size, more than half of employees of medium sized businesses who have exaggerated an expense claim do so at least once a year, while in micro businesses half of wrongdoers have only ever done so once in their life.
The average value of personal items claimed in the last twelve months by employees of medium sized businesses who have exaggerated an expense claim was also highest at £3,108, falling to £775 for those working in micro sized organisations.
Jon Hancock, MD, commercial at RSA, said: "This research demonstrates the frightening ease with which employees are able to sneak personal items through the business expense claims process. They might believe that a small amount here and there won't make a difference, but it adds up and over time can have a major impact on businesses and, by extension, on the wider economy.
"Employers must make sure they have robust processes in place to safeguard against fraudulent expense claims – the importance of which should not be underestimated."
A report by financial reporter Nils Pratley in today's Guardian suggested the RSA's methodology was founded on a "basic error" and described the £1,768 figure as "dodgy".